EUR/GBP pressured as UK economy posts modest Q3 growth

• EUR/GBP trades lower as firm UK GDP data lends support to the Pound.
• UK economy grows 0.1% QoQ in Q3, confirming the preliminary estimate.
• BoE’s cautious easing stance contrasts with steady ECB guidance.

The Euro (EUR) trades on the back foot against the British Pound (GBP) on Monday, as Sterling firmed against its major peers following the release of the United Kingdom’s Q3 Gross Domestic Product (GDP) report. At the time of writing, EUR/GBP is trading around 0.8741, staging a modest recovery after hitting an intraday low near 0.8728.

Data published by the Office for National Statistics showed that the UK economy expanded by 0.1% QoQ in Q3 2025, confirming the preliminary estimate and marking a slowdown from 0.2% growth in Q2. In output terms, activity was supported by services and construction, both rising 0.2%, while the production sector contracted by 0.3%.

On an annual basis, UK GDP was 1.3% higher compared with the same quarter a year earlier.

From a monetary policy perspective, the GDP figures do little to materially shift the Bank of England’s (BoE) near-term outlook but reinforce its cautious stance. The central bank delivered a 25 basis point (bps) interest rate cut last week, while stressing that although interest rates could move lower over time, future policy decisions are becoming a “closer call.”

On the Euro side, the economic calendar remains light as markets drift into the year-end holiday period, keeping trading conditions thin. Still, comments from European Central Bank (ECB) officials crossed the wires and offered some support to the single currency.

Governing Council member Gediminas Šimkus said inflation is expected to hold near the 2% target over the medium term, while acknowledging that economic growth has improved but remains sluggish. Meanwhile, Peter Kažimír noted that the ECB remains flexible and ready to act if needed, and Boris Vujčić stressed that risks to inflation and growth are broadly balanced, adding that the next policy move could go in either direction.

The ECB kept all three key interest rates unchanged at last week’s meeting and reiterated that policy decisions will be taken on a meeting-by-meeting, data-dependent basis. That said, ongoing speculation around a potential ECB rate hike next year, particularly after the central bank upgraded its growth and core inflation forecasts, continues to support the Euro and helps limit downside pressure in EUR/GBP.